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President Obama and other so-called progressives insist that the American people are not overly dependent on government. They also predict dire consequences if the automatic budget “cuts” known as sequestration take place March 1.

Both claims cannot be true. If modest across-the-board “cuts” — mainly cuts in the rate of growth — in military and domestic spending pose a threat to the American people and the U.S. economy, then the country is alarmingly dependent on government.

Federal spending has grown dramatically since the 1970s, with the biggest increases coming during Republican administrations. Spending today is hundreds of billions greater than in 2008 and much higher as a percentage of the economy. True, it is lower now than in 2009, but that year, a combination of George W. Bush and Obama “stimulus” spending, set a record.

The sequester consists of $1.2 trillion in across-the-board cuts in non-entitlement spending growth over ten years. To put that in perspective, Reason editor Nick Gillespie writes, “Remember that we’re talking about $1.2 trillion dollars taken out of a projected $44 trillion or so in spending. What kind of budget discipline is that?”

As that March 1 sequester approaches, the Obama administration warns of severe consequences for national security and economic security.

It is hard to take seriously the claim that even a small and temporary decrease in Pentagon spending would endanger the American people. Military spending has skyrocketed since the year 2000, and the United States spends almost as much on the means of war as the rest of the world combined — indeed, it spends more than it did at the height of the Cold War. The U.S. military is now out of Iraq and is beginning to leave Afghanistan. One should expect a fall in spending under those circumstances — unless the government plans to invade more countries.

Yet Obama and outgoing defense secretary Leon Panetta foresee great danger. Nonsense. As analyst Veronique de Rugy writes, “Defense spending has almost doubled in the past decade in current dollar terms and will continue to grow in spite of automatic cuts.” Summarizing Rugy’s findings, Gillespie writes, “Assuming maximum sequestration, Defense would increase only 16 percent in current dollars over the next decade, rather than 23 percent without sequestration.” Some cut.

Of course, much could and should be cut from the military by ending the U.S. government’s imperial foreign policy — which makes enemies for the American people — and moving to a policy of strict noninterventionism. This would not only save money; it would be the right thing to do. The U.S. government should not be policing the world.

What about the claims that a spending slowdown would harm the economy? We’re told the economy could fall back into recession if spending is not maintained at the vigorous pace previously planned. After all, it is argued, if government workers are laid off and fewer military contracts are written, less money will be in people’s hands to spend on goods and services. Considering that the government wouldn’t actually have less revenue under sequestration, this is an outrageous exaggeration if not an outright lie. Of course, beneficiaries of that spending — especially the parasitic politicians and the military-industrial complex — have every reason to mislead the taxpayers. The people’s natural interest in lower taxes and lower government spending must be overcome somehow. Frightening them into believing that even a slowing of the growth in spending would wreck the economy is just the ticket.

Even if it were true that the economy would slow down, it would be no more than a short-term effect that would quickly give way to real, sustainable economic growth, assuming the government took other needed steps to free the economy. Government employees and contractors spend the taxpayers’ money. If the largess ends, the producers of that wealth will be free to spend and invest as they like. That’s not only just; it’s how sound economies are generated. Politicians use the force of the state to shape the economy to their own purposes. That violates freedom and stifles prosperity.

Contrary to the Keynesian ruling elite, government does not generate economic growth. The free market, unburdened by spending, taxes, regulation, and privilege, contains all that it needs to raise living standards for all. After sequestration, let’s start seeing real and substantial cuts in spending.

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Sheldon Richman is former vice president and editor at The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State.
Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..."
Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics.
A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.

Reading List

Prepared by Richard M. Ebeling

Austrian economics is a distinctive approach to the discipline of economics that analyzes market forces without ever losing sight of the logic of individual human action. Two of the major Austrian economists in the 20th century have been Friedrich A. Hayek, who won the Nobel Prize in Economics, and Ludwig von Mises. Posted below is an Austrian Economics reading list prepared by Richard M. Ebeling, economics professor at Northwood University in Midland and former president of the Foundation for Economic Education and vice president of academic affairs at FFF.